QQQQ Trend Analysis - 6/23/2006

After several volatile months the last week stock market move does not look very exciting. For the most of the week QQQQ stuck in the trading range between 38/39 support/resistance levels.

Long-term perspective: Our long-term perspective has not change. Long-term QQQQ chart presents a channel started in mid 2003. Some technical indicators and the trend analysis suggest that long-term uptrend might be complete and the long-term support line might me broken soon. This scenario is valid as far as QQQQ does not break short-term downtrend resistance line. QQQQ chart reached the support line on June 13. Weekly William"s Percentage Range and Lane"s Stochastic are both in oversold area now. That could suggest that the rally started on June 13 from a long-term support trend line might not be over yet. Another possible scenario may suggest that the long-term channel is still valid and QQQQ will move up toward the long-term resistance line, making a new high. For both scenarios we expect the current rally to be short and QQQQ to retest the support line.

Short term perspective: The short-term price channel has support at 36.45 (± 0.17) and resistance at 38.37 (± 0.17). The current price is near a resistance level. This resistance line was once an old downtrend support line. It was broken and became a new resistance. If QQQQ breaks this trend line again then the old resistance line will become a valid resistance once again. This is necessary to reset weekly oversold indicators and it will allow the next strong down wave to start. If QQQQ does not break the current resistance now and turns down, then both weekly and daily oscillators will be oversold soon and the down wave should be exhausted.